The banks' greatest fear is the CEC's Glass-Steagall policy to break them up

The 13 March Australian Financial Review editorial (The
AFR View) drew the battle lines in the fight over banking in
Australia. On one side are the big banks, their apologists in
Parliament and the media, like AFR, and their accomplices
in APRA and the other regulators. They claim the banking
system is "successful" and "unquestionably strong", and
opposed a Royal Commission, despite the plethora of evidence
of bank crimes and abuses of customers. On the other
side, according to the AFR, is the Citizens Electoral Council.
The AFR didn't single out the CEC by name, but by its number
one policy—the Glass-Steagall separation of the banks.

Speaking as it does for the banks, the AFR revealed that,
more than having the banks' crimes and abuses aired in the
Royal Commission and being forced to compensate their victims,
the banking establishment's greatest fear is they will be
forced to break up. This is clear from the stern warning the
AFR editors issued to Commissioner Kenneth Hayne. "The
Hayne commission is not designed to be an inquiry into how
our entire successful banking industry has been structured",
AFR said, "and nor must it become one." (Emphasis added.)
The editorial expressed the fear that the magnitude of the inquiry
"sets up the expectation that some radical overhaul of
the banking system should follow" such as "a forced breakup
of their activities", specifically the "vertical integration of
banking, insurance and wealth management".

Banks are structured to exploit customers—the Royal Commission must investigate APRA and banking structure

Stop Press: The editors of the Australian Financial Review, who opposed a Banking Royal Commission at every turn, today (13 March) insisted it “is not designed to be an inquiry into how our entire successful banking industry has been structured, and nor must it become one”. The banks’ cheerleaders at AFR also expressed fear that the Royal Commission could set up expectations of “a forced break-up of their [the banks’] activities”. Read the following release, drafted yesterday before the AFR editorial came out, which explains why the Royal Commission must do precisely what the AFR says it mustn’t.

When Malcolm Turnbull called the Banking Royal Commission, after receiving permission from the banks, he was jumping before he was pushed. On behalf of the banks, Turnbull and his fellow bankers in the Liberal Party were alarmed that National MPs had gone rogue with the ALP, Greens and cross-benchers, to draft terms of reference that would have required the Royal Commission to examine the structure of banking and the regulatory system. Among other things, this would have included bank regulator the Australian Prudential Regulation Authority (APRA), and so-called vertical integration—the practice of universal banking, in which major banks are massive conglomerates of all kinds of financial services. Turnbull’s bank-approved terms of reference for the Royal Commission dropped any mention of vertical integration, and stipulated that the Royal Commission is “not required” to inquire into “macro-prudential policy and regulation”, i.e. the regulatory structure of banking, including APRA’s prudential policies.

This restriction is a travesty. It’s akin to an inquiry into chicken deaths being disallowed from investigating the management of hen houses by foxes! The Commissioner can do the best job in the world, but if all he is allowed to do is investigate and highlight instances of banks abusing their customers, but not look into the structure of banking that allows banks to exploit their customers for their group profits, the Royal Commission is an exercise in futility. That is no reflection on Commissioner Kenneth Hayne.